SRA Crack Down On Price Transparency And Inadequately Informing Clients
The Conveyancing sector has been accused of struggling to fully comply with price transparency regulations, according to an industry regulator.
The Residential Conveyancing Thematic Review, conducted by the Solicitors Regulatory Authority (SRA), has found that many conveyancing transactions are costing a lot more money than the initial quote that was made to the client. In 34% of cases, the initial quote did not include fees for additional work; work that the SRA believe should have been anticipated and incorporated into the original quote.
Additional fees were charged for electronic ID checks, administering gifted deposits, processing bank transfers amongst other work the SRA deemed to be standard procedural tasks. The concern for customers being forced to find additional funds at an already difficult time was levied at the firms involved.
In regards to mark-ups being added to the overall costs a bank charged for a telegraphic transfer, it was found that 37% of firms did not openly and transparently reveal this surcharge and in some cases this resulted in fees that were ten times more than the original bank charge.
Almost a quarter of conveyancers (23%) were also accused of ‘failing to properly explain long-term implications of complex contractual clauses. In particular, the SRA found that, within a leasehold purchase, 23% of conveyancers had failed to adequately explain the difference between leasehold and freehold models of ownership.
Concerned that these issues could result in professional negligence claims, the SRA are set to ensure their regulated firms comply with all price transparency rules in the near future. Already, it has been reported that six firms guilty of these breaches have been referred to the SRA’s internal disciplinary processes.
Anna Bradley, SRA Chair, said:
“It is disappointing to see examples of poor practice in conveyancing, which is so important to so many people. While many law firms and solicitors provide a good service and act in their clients’ best interests, those who do not let down not only their clients, but the profession as whole.
“People should be able to rely on their solicitors to be open about what their services will cost, and to explain the potential financial and legal implications of any transaction. When solicitors fail to do this, for example in relation to long term leasehold charges, they may be leaving their clients open to ever increasing and potentially unaffordable financial liabilities.
“We will now be looking closely at how firms are publishing their pricing for conveyancing through our programme of monitoring firms’ websites. We have already published information for the public on the issue of leaseholds and we will be sharing this report with the Government as it considers leasehold reform.”
Mike Leeman, Managing Partner at Bell Lamb and Joynson Solicitors, said:
“Conveyancing is big business and our property department at BLJ Solicitors is an area of significant growth having increased by 50% in recent years in terms of the volume of cases we deal with nationwide. We believe that a reason for this increase is down to our client centred ethos which starts with price transparency.
“As a firm that has implemented price transparency since 2016 and has continued to champion the movement within the sector, we are shocked to learn that 34% of firms are still providing inaccurate quotes. The market trend suggests that many firms are seeing a decline in conveyancing for a number of reasons which include rising property prices, and so under quoting can be used as a way of securing a client before introducing hidden or increased costs along the way. This is an entirely unethical method and we believe that an upfront and honest approach from the initial quote through to completion is essential for increasing business. With price transparency and clear communication at the heart of our business, we’ve been able to uphold our reputation as a leading property law firm since 1821, securing repeat and new custom based on this.
“Following more recent changes in UK regulations, legal firms are now required to practice price transparency so with this in mind, we hope to see this latest figure reduce significantly down from 34%. Our view is that the customer comes first and we believe that these conditions will instil confidence between clients and solicitors and help to dispel the stigma around the financial value of conveyancing.”
Are these additional charges difficult to predict when making a quote? Should more firms become a lot more transparent with their fees? Is it the role of the conveyancer to educate the buyer about the different types of home ownership?